FAIRWORKACTREVIEW

SUBMISSION OF

THECONFEDERATIONOFACTINDUSTRY

FairWorkActReview

FairWorkActReview

Introduction

  1. ThissubmissionisputforwardbytheConfederationofACTIndustryforconsiderationaspartofthe Fair Work Act review process.
  2. TheConfederationofACTIndustry(ConfACT),tradingastheACTRegionChamberofCommerceIndustry,isanemployerorganisationrepresentingapproximately650organisationsintheAustralianCapitalTerritoryandNewSouthWales. As such, ConfACT is the largest and strongest voice for business in the Australian Capital Territory region. MembersoftheConfederationaretypicallysmalltomediumsizedbusinessesorcommunityorganisations,withasmallernumberofmembersclassedaslargeemployers.
  3. ConfACTisaffiliatedwiththeAustralianChamberofCommerceIndustry(ACCI)and notes that ACCI has put forward a major submission to the Fair Work Act Review, incorporating the views of a number of Chambers of Commerce and industry bodies.
  4. ConfACT endorses the submissionsmadebyACCI. Thefollowingadditionalcommentsareprovided in relation to some elements of the Fair Work Act 2009 that are problematic in their operation.

GeneralProtections

  1. TheGeneralProtections provisions contained inPart3-1oftheFairWorkAct2009areintendedtopreserveanumberofworkplacerightsforpartiesincludingemployees,employers, andcontractors. TheGeneralProtectionsalsosetouttoprotecttherightofpartiestoundertakelegitimateindustrialactivities,andprovideotherprotections.
  2. Clearly,theGeneralProtectionsintheFairWorkAct2009gofarbeyondtheprovisionscontainedintheformerWorkplaceRelationsAct1996,aspartiesareprotectedagainstawholerangeofadverseactions,notmerelyagainstdismissal. Therangeofprotectionsthusprovidedislaudableasaobjective,butinpracticetheprovisionisflawed.
  3. WhiletheGeneralProtectionstheoreticallyprotectanumberofpartiesintheworkplacefromadverseactions,inpracticetheonlypartiesabletousetheprovisionsareemployeeswhonotifyGeneralProtectionsdisputesasacomplaintagainstanaction,orperceivedaction,oftheiremployerorformeremployer.
  4. AsubstantialdifficultyforanypartyfacingaGeneralProtectionscomplaint,andtherebyforcedtodefendtheiractions,isthereverseonusofproofrequirementsetinplacebySection361oftheFairWorkAct. Thereverseonusofproofrequiresthatanallegationispresumedtobetrueifapersonallegesthatanotherpersontookadverseactionagainstthemforsomeparticularreason. Theburdenofdisprovingtheallegationisplacedonthesecondpersonagainstwhomtheallegationismade.
  5. ThisisaveryrealproblemfortherespondentinanyGeneralProtectionsdispute.Frequently,theallegedmotivationforaparticularactionhasnoconnectionwiththerealbasisforthedecision. However,therespondentmaybesubjecttosubstantialfinesifheorsheisunabletorefutea(possiblybaseless)allegation.

  1. Itisacknowledgedthatthereisasoundbasisfornotrequiringtheallegedvictimofadverseactiontofullyprovethereasonfortheiradversetreatment. Therewillbeinstancesofgenuine(unwarranted)discriminationwhereadverseactionhasbeentakenforaproscribedreasonandthevictimofthatadverseactionhasnoproofofthereason. However,thecurrentwordingofthereverseonusofproofprovisionallowscompletelyunsubstantiatedallegationstoberaisedbyapersonwhonotifiesaGeneralProtectionsdispute.
  2. ItwouldbelogicalforapersonlodgingaGeneralProtectionsdisputetoproviderelevantevidencetosupporttheirclaim. Ifevidenceisnotavailableforanyreason, it is bothreasonableandappropriatefortheclaimanttoatleastsetoutthebasisforareasonablebeliefthattheadverseactioncameaboutforaparticular(proscribed)reason. AtpresentitisnotnecessaryforaGeneralProtectionsclaimanttosetoutanyreasonfortheirbeliefthat actionhasbeentakenagainstthemforaparticularreason;itissufficientfortheclaimanttosimplymakeageneralallegationwithoutanybasis.

Recommendation

  1. ItisrecommendedthattheFairWorkAct2009beamendedtoincorporatearequirementforapersonnotifyingaGeneralProtectionsdisputetoshowthattheyhavehadadverseactiontakenagainstthem,andtoeither

(a)provideevidencethattheadverseactionwastakenforaproscribedreason,OR

(b)setouttheirreasonforhavingagenuinebeliefthattheadverseactionwastakenforaproscribedreason.

PaymentofAnnualLeaveonTerminationofEmployment

  1. TheNationalEmploymentStandardsprovideforAnnualLeaveentitlementsforfull-timeandpart-timeemployees. Sub-Section90(1)setsouttherateofpaymenttowhichanemployeeisentitledwhentheemployeetakesaperiodofAnnualLeave. Sub-Section90(2)setsouttherateofpaythatshouldapplytothecalculationof thevalueofaccumulatedleavepaidoutthetheemployeeuponterminationofemployment.
  2. UnfortunatelythereisconsiderabledebateanddisputeoverthecorrectinterpretationandapplicationofSub-Section90(2),particularlyinregardtowhetherAnnualLeaveLoadingshouldbeincludedinthepayrateforcalculationofthevalueoftheAnnualLeave.
  3. ManyemployeeshaveanentitlementundertherelevantModernAwardorEnterpriseAgreementtobepaidanAnnualLeaveLoadingasanadditionalpaymentwhentheyproceedonaperiodofapprovedAnnualLeave. NotethatthisentitlementisnotcanvassedinanywayintheNationalEmploymentStandards,anditisnotpartofthepaymentforAnnualLeave. AnnualLeaveLoadingisastand-alonepaymentthatisonlypaidincircumstancesprescribedbytheModernAwardorEnterpriseAgreementthatcreatestheentitlement.
  4. ModernAwardswereauthorisedbytheAustralianIndustrialRelationsCommissionin2008and2009. TheAIRCconsultedwidelywithemployergroups,unions,andotherpartiesduringtheperiodwhentheModernAwardswerebeingformulated,andpastpracticesand “traditions” prevalentinparticular industrieswere,tosomeextent,recognisedinvariousModernAwards.
  5. Most,butnotall,ModernAwardsprovideanentitlementtoAnnualLeaveLoadingforanemployeeproceedingonapprovedAnnualLeave. However,thereisnouniformapproachtakeninModernAwardstotheissueofwhetherAnnualLeaveLoadingshouldbeincludedasaterminationpaymentinrespectofAnnualLeavewhichremainsunusedatthetimethatanemployee'sengagementends.

(a)SomeModernAwardsspecifythatAnnualLeaveLoadingisnottobepaidoutonterminationofemployment;

(b)SomeModernAwardsspecifythatAnnualLeaveLoadingmustbepaidoutonunusedleaveuponterminationofemployment;

(c)themajorityofModernAwardsaresilentontheissue.

  1. ItisapparentthattheAIRC,inmakingModernAwards,consideredtheissueofAnnualLeaveLoadingpaymentsonterminationofemployment,andincludedappropriateprovisionsinparticularModernAwardstakingintoaccountpastcustomandpracticeinvariousindustries,andotherrelevantfactors.
  2. TheFairWorkOmbudsman'sofficelastyearchangeditspositionontheinterpretationandapplicationofSub-Section90(2),andcurrentlyadvisesthattheSub-SectionrequiresthatAnnualLeaveLoadingshouldbeincorporatedintothepaymentfortheAnnualLeavepaidtoanemployeeontermination. Thisinterpretationcanbedisputedonanumberofbases,andIamaware thattheAustralianChamberofCommerceIndustryhasforcefullyputtheviewtotheFairWorkOmbudsmanthathisoffice'sadvicetoemployersandemployeesonthisissueisincorrect.
  3. Withoutgoingintothewholerangeoflegalarguments,theFairWorkOmbudsman'spositioncaneasilybeseentoproduceanabsurdoutcomeinthecaseofanemployeewhoiscoveredbyaModernAwardthatrequirespaymentofunusedAnnualLeaveLoadingupontermination. TheemployeewouldthereforereceiveanamountofAnnualLeaveLoadingupontheendingofhisemploymenttosatisfytheawardobligation. IftheOmbudsman'srulingisfollowed,thesameemployeewouldreceiveapaymentforhisunusedAnnualLeavewhichwascalculatedbasedonawageratethateffectivelyincorporatedtheAnnualLeaveLoading. Theemployeewouldthereforebe “entitled” tobepaidtwiceforhisAnnualLeaveLoadingupontermination;onceasadiscretepaymentofAnnualLeaveLoading,andagainthroughthepaymentoftheAnnualLeaveentitlementata “loaded” rate.
  4. InthisscenariotheemployeewouldactuallyreceiveagreaterpaymentforhisaccruedAnnualLeave(andLoading)as a terminationpaymentthanhewouldifhehadtakentheleavewhilestillanemployee. ThiswouldbeanabsurdoutcomethatsurelycannotbeavalidinterpretationofSection90oftheFairWorkAct.
  5. Regrettably,uncertaintyovertheproperinterpretationofSub-Section90(2)hasexistedforanextendedperiod,withtheresultthatemployersandemployeesareuncertainoftheirproperentitlementsandobligations. Itisourunderstandingthatsomeemployershave(quiteunjustifiably)beencoercedintomakingoverpaymentsthroughthethreatoflegalactionbytheFairWorkOmbudsman'soffice.

Recommendation

  1. ItisrecommendedthattheintendedapplicationofSub-Section90(2)beclarified,toindicatethatAnnualLeaveLoadingisnottobeconsideredasapartoftheemployee'swageforthepurposeofcalculatingthepaymentduetotheemployeeinrespectoftheiraccumulatedAnnualLeave. ItisourunderstandingthatthiscouldbeachievedeitherbyRegulationorbyamendingtheprincipalAct.
  2. Onothermattersnotspecificallyaddressedinthissubmission,wesupportandendorsethesubmissionsoftheAustralianChamberofCommerceIndustry(ACCI).
  3. Wethankthe Review Panel forthisopportunitytocontributetothe Fair Work Act Review process. I would be pleased to be contacted on (02)62835236,,toprovideanyfurtherinformationnecessary.

GregSchmidt
Director,WorkplaceRelations
ConfederationofACTIndustry
17February2012

Submission bytheConfederationofACTIndustrytotheFairWorkActReview